Owning property in Uganda is a significant milestone, and much can be observed from the number of tenants whose end goal is to escape and break free from the rent trap. However, along with the pride and status of home ownership, comes the responsibility of understanding, and adhering to property taxes—which is why you are with me today. Whether you are a seasoned real estate investor, a first-time homeowner, or perhaps passing through for future plans, this guide is for you.
What are Property Taxes?
Well, as the name suggests, property taxes are levies imposed by local governments on property owners. For Uganda, these taxes vary based on the type of property, its location and its use with fines subjected to those that default on these obligations.
The Key Types of Property Taxes in Uganda.
Annual Rental Value Tax (ARV).
If you’re a rental property owner, the ARV tax is for you, based on the estimated rental income your property could generate annually…even if it’s not currently rented out.
Local authorities assess factors like the property’s size, location and amenities to determine its rental value.
For example, in Kampala, the Kampala Capital City Authority (KCCA) revised the ARV tax rates in 2020. Properties generating up to UGX 5 million in rental value are taxed at 4%, while those exceeding this amount are taxed at 6%.
Ground Rent
If your property sits on leased land, you’re required to pay ground rent to the landowner. This fee is not just a formality since it’s essential to maintaining the legal validity of your lease. Missing payments could lead to disputes or even losing your lease rights.
Capital Gains Tax (CGT)
Thinking of selling your property? Be ready for this one. The Capital Gains tax is charged on the profit you make from selling your property. In Uganda, CGT stands at 30%, although primary residences often enjoy exemptions.
Interestingly, in 2024, the government proposed a 5% CGT on non-business assets, including land and rental properties in urban areas, to boost domestic revenue which could significantly impact real estate investors and occasional property sellers if passed.
Stamp Duty.
Whenever property ownership changes hands, stamp duty is levied. This one-time tax is calculated as a percentage of the property’s value, typically ranging between 0.5% and 4%. Without paying stamp duty, you can’t officially register the property in your name, which could cause legal headaches down the line.
Local Service Tax (LST)
This tax is intended to help fund community services like garbage collection, road repairs and public amenities. While it is sometimes coupled with the ARV tax, some local authorities collect it separately.
Recent Developments in Property Taxation.
No new taxes in 2025/2026. The Ugandan government announced that no new taxes will be introduced in the 2025/2026 financial year, instead focusing on improving the efficiency of existing tax systems and curbing corruption in public fund management. This stability offers property owners a breather, allowing them to plan their finances without the fear of sudden tax hikes. Gov’t Says No New Taxes in 2025/26 – NilePost
That said, discussions are underway to revise current property tax rates. The government acknowledges that the country collects less than 40% of potential property tax revenue, partly because existing rates are seen as unfriendly. Making these taxes more affordable could improve compliance and broaden the tax base, ultimately benefiting both the government and property owners.
Some tips for property owners.
Stay Informed: Keep up with changes in tax laws, especially updates from local authorities, ignorance is no exception from accountability.
Keep Records: Maintain proper documentation of all tax payments to avoid disputes, evidence/proof of receipt can save you a lot of trouble.
Budget for Taxes: Factor property taxes into your annual budget to avoid last-minute financial strain. It’s always easier to spend on expected expenses than on abrupt fines.
